The European Parliament paves the way for more innovations

On 14 April, the European Parliament adopted the legislative proposal on the protection of undisclosed know how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

Brands create innovation and innovations create brands. Thus, AIM has always fought against practices that undermine innovations by removing the incentive to innovate. The 48 AIM corporate members account for an annual R&D investment of €14 bn. If they were a country they would rank fifth in the EU ahead of the Netherlands, Sweden or Spain. Research conducted by Europanel for AIM showed that brands perceived as innovative are more trusted by consumers (link). Finally, light has recently been shed with a study by the European Union Intellectual Property Office and the European Patent Office on the contribution of trade mark intensive industries, showing that these industries contribute over €4 trillion, or 34% of the EU’s economic output (GDP), account for almost 21% of jobs in the EU and pay a 42% wage premium over non IP-intensive industries.

In the food sector, a voluntary initiative called the Supply Chain Initiative, together for fair trading practices (SCI), founded by 7 EU level associations, had adopted as one of its key principle the protection of confidentiality: “Confidentiality of information must be respected unless the information is already public or has been independently obtained by the receiving party lawfully and in good faith. Confidential information shall be used by the recipient party only for the purpose for which it was communicated. Example of unfair trading practice: A contracting party uses or shares with a third party, sensitive information provided confidentially by the other contracting party, without the latter’s authorization, in a way that enables it to obtain a competitive advantage.”.

Article 3 of the new legislation on trade secrets will provide an additional remedy to tackle unfair practices of companies in the food supply chain that have not joined the Supply Chain Initiative and other sectors not covered by the SCI. It will also help in those cases where signatories to the supply chain initiative are in breach of this principle.

Hopefully, the new regulatory framework will contribute to protect innovative companies against parasitic behaviours, with accompanying benefits for consumers and Europe’s competitiveness.